Beginning with the passage of the Airline Deregulation Act of 1978, the dramatic changes in the passenger commuter airline segment of the U.S. aviation industry are identified and evaluated. The results of this evaluation provide a background for judging the future course for government policies in this segment of the U.S. airline industry. Since airline deregulation, there has been accelerated growth in this segment of aviation, frequently without regard to available resources. Unanticipated increases in fuel prices, the strike of air traffic controllers, and a general business slowdown in the United States, have adversely impacted the commuter airline industry and their basic constituency, the small communities. The performance, and perhaps the survival, of the approximate 150 passenger commuter airlines, and the air service to small communities will depend on governmental policy adjustments in the areas of: essential air service standards, subsidy goals and standards, airport access priorities, joint fares, commuter aircraft development, and FAA commuter loan guarantees. Sound planning, and more realistic allocation of resources for the commuter management, small community air service advocates, and governmental policy makers are required. This means there is a need for enlightened regulatory policies, and improved and strengthened management.